3 Canadian Stocks to Buy for a “Pay Me First” Portfolio

Three TSX income stocks offer monthly cash flow from royalties, industrial chemicals, and a familiar restaurant brand.

Key Points
  • Freehold Royalties pays a high monthly dividend with a lean royalty model, but it still relies on oil prices.
  • Chemtrade generates strong cash flow and guides for steady 2026 results, supporting its monthly distribution.
  • Pizza Pizza pays monthly income from royalty sales, though its payout ratio has been stretched recently.

A “pay me first” portfolio does exactly what the name suggests. These are stocks built to send money back to shareholders through steady dividends or distributions, ideally every month or every quarter. So, let’s look at three to consider on the TSX today.

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Source: Getty Images

FRU

Freehold Royalties (TSX: FRU) looks like a natural fit for that approach as it isn’t drilling wells itself. It owns royalty interests across oil and gas lands in Canada and the United States, so it collects revenue while avoiding the heavy capital costs that producers face. That makes the business model leaner than a typical energy stock. Over the last year, Freehold kept expanding the benefit of its late-2024 U.S. acquisitions, and management said 2025 marked its fifth straight year of production growth. It also kept its monthly dividend at $0.09 per share, with management saying that the payout remains supported even if WTI falls to US$50 per barrel.

The numbers still look solid. In 2025, funds from operations rose 2% to $235 million, even though WTI pricing fell 14%. Production climbed 9% to 16,294 barrels of oil equivalent per day (boe/d), helped by a 33% jump in U.S. output. The dividend stock carried a market cap near $2.88 billion and a forward yield above 6% at writing as well. The risk, of course, is that Freehold still depends on commodity prices and operator activity. But for investors who want monthly income with less operating risk than a traditional producer, the dividend stock checks a lot of boxes.

CHE.UN

Chemtrade Logistics Income Fund (TSX: CHE.UN) brings in income from industrial chemicals that serve water treatment, energy, and manufacturing. Over the last year, Chemtrade delivered record results, lifted its distribution again, and kept pushing growth projects, including its ultra-pure acid expansion. It also highlighted contributions expected from the Polytec and Thatcher Group assets, which should help support earnings even in a maintenance-heavy 2026.

Chemtrade’s 2025 revenue rose 11.8% to $1.998 billion, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) hit a record $507.4 million. Distributable cash reached about $228 million, or $1.99 per unit. Management’s 2026 adjusted EBITDA guidance sits between $485 million and $525 million, so it isn’t promising a moonshot, but it is signalling resilience. The dividend stock holds a trailing price-to-earnings (P/E) of around 12.6 and a forward P/E of around 11.5 at writing, which still looks reasonable for a business throwing off this kind of cash.

PZA

Pizza Pizza Royalty (TSX: PZA) is the most consumer-facing pick of the three, and that’s part of the appeal. It doesn’t run the restaurants directly. Instead, it collects royalty income from Pizza Pizza and Pizza 73 sales, which gives investors a cleaner income stream tied to a familiar brand. Over the last year, the story improved. After weaker 2024 same-store sales, the dividend stock reported third-quarter 2025 same-store sales growth of 0.1%, royalty pool sales growth of 2.0%, and 11 net new restaurant locations. Recently, it also reaffirmed its monthly dividend of $0.0775 per share ahead of fourth-quarter 2025 results.

In 2024, Pizza Pizza paid out $0.93 per share in dividends and posted a 110% payout ratio, which was above its usual target. Still, it kept a working capital reserve, and the latest reported quarter showed adjusted earnings per share (EPS) of $0.236, nearly flat year over year. The dividend stock currently has a market cap of around $528 million, a P/E of 16.8, and a forward yield of around 5.8%. It isn’t perfect, but for investors who want monthly cash flow from a low-beta consumer name, it still has a place.

Bottom line

Put those three together, and you get a pretty smart “pay me first” mix. Freehold brings energy royalties, Chemtrade adds industrial cash flow, and Pizza Pizza throws in consumer income. And even $7,000 can bring in the dividends you crave.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENT
CHE.UN$15.40454$0.72$326.88Monthly$6,991.60
PZA$15.80443$0.93$411.99Monthly$6,999.40
FRU$17.58398$1.08$429.84Monthly$6,996.84

None is risk-free, and each faces its own pressure points. But all three give investors something many stocks don’t. A real reason to keep holding, even when the market gets noisy.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Freehold Royalties. The Motley Fool has a disclosure policy.

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